White-minority asset gap widens

Analysis shows racial and ethnic impact of the economic meltdown

Hope Yen Associated Press

Published 12:20 am, Tuesday, July 26, 2011

Photo: ROBYN BECK

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A home is for sale in Glendale, California May 31, 2011. US home prices fell to new, post-bubble lows in March with no end to the decline in sight according to analysts. The latest Standard & Poors Case-Shiller home price index figures released May 31 show prices for homes in 20 cities fell 0.8 percent from February, the eighth drop in a row. Prices are down 33.1 percent from their July 2006 pre-bust peak. AFP PHOTO / ROBYN BECK (Photo credit should read ROBYN BECK/AFP/Getty Images) less

A home is for sale in Glendale, California May 31, 2011. US home prices fell to new, post-bubble lows in March with no end to the decline in sight according to analysts. The latest Standard & Poors ... more

Photo: ROBYN BECK

White-minority asset gap widens

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WASHINGTON -- The wealth gaps between whites and minorities have grown to their widest levels in a quarter-century. The recession and uneven recovery have erased decades of minority gains, leaving whites on average with 20 times the net worth of blacks and 18 times that of Hispanics, according to an analysis of new Census data.

The analysis shows the racial and ethnic impact of the economic meltdown, which ravaged housing values and sent unemployment soaring. It offers the most direct government evidence yet of the disparity between younger minorities whose main asset is their home and older whites who are more likely to have 401(k) retirement accounts or other stock holdings.

"What's pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade -- because that was the American dream -- are seeing big declines," said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality.

The median wealth of white U.S. households in 2009 was $113,149, compared with $6,325 for Hispanics and $5,677 for blacks, according to the analysis released Tuesday by the Pew Research Center. Those ratios, roughly 20 to 1 for blacks and 18 to 1 for Hispanics, far exceed the low mark of 7 to 1 for both groups reached in 1995, when the nation's economic expansion lifted many low-income groups to the middle class.

The white-black wealth gap is also the widest since the census began tracking such data in 1984, when the ratio was roughly 12 to 1.

"I am afraid that this pushes us back to what the Kerner Commission characterized as 'two societies, separate and unequal,'" said Roderick Harrison, a former chief of racial statistics at the Census Bureau, referring to the 1960s commission that examined U.S. race relations.

Stock holdings play an important role in the economic well-being of white households. Stock funds, IRA and Keogh accounts as well as 401(k) and savings accounts were responsible for 28 percent of whites' net worth, compared with 19 percent for blacks and 15 percent for Hispanics.

According to the Pew study, the housing boom of the early to mid-2000s boosted the wealth of Hispanics in particular, who were disproportionately employed in the thriving construction industry. Hispanics also were more likely to live and buy homes in states such as California, Florida, Nevada and Arizona, which were in the forefront of the real estate bubble, enjoying early gains in home values.

But those gains quickly shriveled in the housing bust. After reaching a median wealth of $18,359 in 2005, the wealth of Hispanics -- who derived nearly two-thirds of their net worth from home equity -- declined by 66 percent by 2009. Among blacks, who now have the highest unemployment rate at 16.2 percent, their household wealth fell 53 percent from $12,124 to $5,677.

In contrast, the median household wealth of whites dipped 16 percent from $134,992 to $113,149, cushioned by the market recovery that began in mid-2009.

The numbers are based on the Census Bureau's Survey of Income and Program Participation, which sampled more than 36,000 households on wealth from September-December 2009.